Etihad Airways, the national airline of the United Arab Emirates, has received the Airfinance Journal ‘Merger and Acquisition Deal of the Year’ award at a recent ceremony in Miami, USA.

The prestigious accolade was presented in recognition of Etihad Airways’ acquisition of a strategic minority equity stake in Alitalia, the national carrier of Italy, in 2014.

James Hogan, President and Chief Executive Officer of Etihad Airways, said, "We are delighted and honoured to receive this award. It is an endorsement not only of this transaction, but of our business model, which leverages partnership and economies of scale for network growth and to create business synergies across the broad spectrum of airline activities.

"Alitalia is one of the most iconic brands in global aviation in one of the world’s largest travel markets. We were confident that with the right level of capitalisation and a strong, strategic business plan, the airline could be turned around and repositioned as a premium global airline once again."

As part of the restructuring deal, valued in total at more than Euros 1.75 billion, Etihad Airways invested Euros 560 million to acquire a 49% shareholding in New Alitalia, 75% of its frequent flyer programme, and asset purchases to restructure the airline’s balance sheet. This was complemented by a further equity investment of Euros 300 million from existing core Alitalia shareholders, including Intesa San Paolo (Euros 88m), Poste Italiane (Euros 75m), UniCredit (Euros 63.5m), Atlantia (Euros 51m), IMMSI (Euros 10m), Pirelli (Euros 10m) and Gavio (Euros 2.5m).

The transaction also made provision for up to Euros 598 million in financial restructuring of short and medium term debt provided by financial institutions and existing bank shareholders, and Euros 300 million of new loan facilities extended by Italian financial institutions.

The transaction was completed on December 31st, 2014, after receiving European Commission merger clearance, leading to the establishment of New Alitalia SAI.

"The negotiation process leading to the conclusion of the deal was a tough multi-stakeholder process which took more than a year, and we would like to acknowledge the positive support of the government, the shareholders, the unions and the people of Alitalia in achieving a consensus and in addressing the conditions' precedent we required in order to proceed with this strategic transaction.

"For us it was very important not only to obtain the buy in of all these stakeholders, but also to stabilise the business so that from the start, our investment would be focused on supporting the implementation of the new business plan for a sustainable Alitalia.

"This is a strategic, long-term commercial investment for us and we are committed, with the other shareholders, to support the new management team to reinvigorate Alitalia as a competitive, sustainable and profitable business that can operate successfully in the global air travel market," Mr. Hogan said.

A strategic development plan to deliver profitability by 2017 has since been unveiled, with an unequivocal commitment by the new executive team and strategic investors to reinvent the airline as a premium global airline representing the best of Italy, with new routes, new product and service standards, new branding, and a new cost management strategy.

Etihad Airways’ advisors for its acquisition of a minority stake in Alitalia were JP Morgan (financial advisor), DLA's London and Italian team, along with Chiomenti (legal advisors), PwC’s London and Italian team (due diligence advisors) and Strategy and Middle East (strategic advisors). On Alitalia's side, the advisors were Citibank (financial advisors) and Bonelli, Erede and Pappalardo (legal advisors).

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